Other governments seem quite capable of having a housing policy, whereas the Hong Kong government says it has a housing policy, but spends most of its time obsessing over the property market. Surely it should be the other way round, even though the administration seems confused over the difference between the two issues.
Housing is essentially a social issue and therefore a legitimate matter for government concern. This is recognised in Hong Kong where roughly half the population lives in public housing, a classic government initiative that ended widespread squatter and slum housing and provides reasonable, although hardly lavish, shelter for the less well off.
The property market, on the other hand, is, as the name suggests, a market. In an ideal world, its operation should be a simple matter of supply and demand. In reality, it's not so simple. For all its insistence on facilitating the free operation of the market, the Hong Kong government intervenes like crazy. However, it mainly intervenes on behalf of property developers and in the interests of those with an existing stake in the market.
The fact that the property market is dominated by some of the most powerful business interests in Hong Kong readily explains why the government is so attentive to their concerns and has been persuaded that preservation of high property prices is somehow sacred.
Government policy on land sales has ensured that a very small clique exercises quite disproportionate control over the market and maintains the high prices and profit margins that are the envy of the world. But it is not just the tycoons who have a stake here because many ordinary people invest the bulk of their assets in property, and they don't want these assets diminishing in value. Indeed, this is the excuse usually given by the government to ensure what it calls 'market stability'.
Yet the excuse would make sense only if the government thought it had to preserve the value of all assets such as shares, bonds and many other investment instruments. Investors, however, fully understand that they need to live with price volatility and don't expect the government to provide some kind of guarantee for what amounts to speculation.
Housing is quite another matter. The history of the government housing policy shows why this is so. The massive public housing programme was in part a genuine social welfare initiative and in equal part a mechanism to allow employers to keep wages down because a purely free market in rental housing would have intensified demands for higher pay. When better-off taxpayers started grumbling about the cost of public housing, they were sharply told by officials that the alternative was wage inflation, which would eat into corporate profitability.